Net Commerce, Chip Cards to Gain Fast, Study Predicts

By Bloom, Jennifer Kingson | American Banker, January 29, 1997 | Go to article overview
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Net Commerce, Chip Cards to Gain Fast, Study Predicts


Bloom, Jennifer Kingson, American Banker


Internet commerce will become a $7.3 billion business by 2000, and credit cards will continue to be the payment instrument of choice for items over $10, according to a new study by Jupiter Communications.

The New York-based electronic commerce consultancy has high hopes for smart cards, predicting that they will make dramatic inroads this year and will account for 26% of on-line transactions by 2000.

"It really seems like there's this kind of gang-up behind credit cards first, smart cards second," said Scott Smith, group director of the digital commerce group at Jupiter and chief author of the report.

Jupiter also predicts that digital cash and checks will gain steady acceptance. In the realm of microtransactions-on-line purchases of items that cost less than $10-the company believes that electronic coins and checks will be used for 40% of Internet purchases by 2000.

Today, credit cards account for more than 90% of on-line consumer payments.

"For now, to the extent that they buy items on-line, consumers are comfortable with using plastic," Mr. Smith said.

"But as new kinds of plastic emerge, like smart cards, and new types of pay-per-use services are created for the Internet, consumer behavior will change."

According to Jupiter's Internet Payments Report, the average number of transactions per on-line household will climb from today's rate of nine per year to 120 per year by 2000, as more low-value goods and services become available through the World Wide Web.

New on-line payment mechanisms are being introduced constantly by a variety of companies large and small. Jupiter predicts that existing companies like Visa, MasterCard, and American Express will ultimately be the ones to profit most from electronic commerce.

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